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FEDERAL JUDGE ORDERS EIGHT MONTEREY COUNTY WATER COMPANIES INTO RECEIVERSHIP

Release Date: 4/11/2002
Contact Information: Lisa Fasano, U.S. EPA, 415/947-4307

     Move is to ensure safe and clean drinking water for customers of Alisal Water Corp.

     SAN FRANCISCO   A U.S. district court judge in San Jose yesterday ordered eight Monterey County water companies owned by the Salinas-based Alisal Water Corp. into receivership, a move that shifts control of the day-to-day operations of the water companies   and the quality of the water provided to customers   from the company.

     The decision is the latest ruling in a federal Safe Drinking Water Act suit brought by the U.S. Environmental Protection Agency and the U.S. Department of Justice against the company and its owners, Robert and Natholyn (Patricia) Adcock. The case, filed in 1997, alleged the Adcocks deliberately falsified lab reports for public water systems submitted to the state and Monterey County from 1991 through 1994 in order to hide violations of the maximum contaminant level for total coliform.  The complaint also cited violations of monitoring and record-keeping rules related to coliform bacteria.
                         
     Judge Jeremy Fogel ruled in September 2000 that the Adcocks were liable for the violations. He also found that the defendants failed to properly monitor for lead and copper levels in nine of the water companies they own.  In November 2001, Fogel held the corporations liable for additional violations   with most of the violations occurring at small water systems that were the subject of extended boil water orders in 2000-2001.  Trial on the appropriate remedy was held in San Jose in December 2001 and January 2002.

     In part, Fogel said in his ruling that "the seriousness, duration and willfulness of (the Adcocks') non- compliance with legal requirements are evidence of a corporate culture which simply 'doesn't get it' in which both regulations and regulators are seen as an inconvenience rather than a means of protecting the public."

     Fogel also noted in his ruling that after this suit was filed, it took 10 months to fix contamination problems at one of the systems. He also pointed out that even during the trial, Alisal Water Corp. continued to violate the Safe Drinking Water Act.

     "This drastic move had to be taken to ensure that customers of these water companies have safe and clean drinking water," said Wayne Nastri, administrator of EPA's office in San Francisco.  "Water suppliers have a responsibility to their customers, the environment, and the law , and this company showed a blatant disregard for all three."

     "Noncompliance with the Safe Drinking Water Act and failure to monitor water quality will not be tolerated," said Tom Sansonetti, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division.  "Our coordination with the state and county sends a message to thousands of privately owned water companies that EPA and DOJ take seriously the rules related not only to drinking water quality but to accurate monitoring and record-keeping."

     The eight water companies which will be placed into receivership are the Toro Water System; the Moss Landing Harbor District Water; the Normco Water System; the Blackie Road Water System #18; the San Jerardo Water System; the Vierra Canyon Water System #30; the Langley/Valle Pacifico Water System; and the Buena Vista Water System.
                                   
   The remaining company owned by the Adcocks, Alco Water Service, which serves approximately 20,000 customers in East Salinas, will not be put into receivership.  However, the court indicated that receivership is a possibility for Alco if it does not stay in compliance and implement needed improvements expeditiously.

     At each of the eight water companies, the initial job of the receiver will be running day-to-day business in compliance with the Safe Drinking Water Act.  The receiver is also charged with immediately investigating the feasibility of  selling the eight systems separately or in combination.  The receiver is also charged with reporting to the Court within 60 days of his or her appointment, the findings with respect to the feasibility of a sale of the companies.

     In addition, even though the Adcocks will maintain control of Alco, the receiver will make sure the company is complying with state and federal drinking water regulations.

     The Court's order also prohibits the Adcock family from acquiring any new interest, financial or otherwise, in any public water system without express permission of the Court.

     Judge Fogel must still decide on a monetary penalty against Alisal Water. In a Memorandum of Intended Decision filed on Feb. 7, he noted that a very substantial penalty is warranted in this case, but that the Adcocks may be financially unable to pay.  Before setting a penalty Fogel will decide if the Adcocks, after learning of the government's investigation against them, moved company and personal assets into trusts in an effort to defraud the government.  Trial on that issue is set for April 25.